Bern, Switzerland (GenevaLunch) – A flurry of news came out of Bern Wednesday afternoon, as the Swiss government (Federal Council) held a desk-clearing session. Bank deposits and bank supervision changes were part of the package.
Deposits insured to CHF100,000
One decision is to extend by a year the temporary measures taken during the financial crisis, to protect bank deposits, in order to allow a new law to go into effect in 2012. Insured bank deposits will thus become law for the first time.
The temporary protection amount up to CHF100,000 will be maintained by the new law, which also obliges banks to maintain 125 percent of their claims covered and other assets inside Switzerland. The total amount guaranteed has been raised to CHF6 billion and pension-related deposits will be given top priority for reimbursement in case a bank fails.
Bank supervision in leadup to financial crisis criticized
Swiss media have been quick to jump on details of a report approved by the government Wednesday, “Clarification of the actions of the Financial Market Supervisory Authority in the financial market crisis”, in particular noting that parties on the left and right were both critical of the report for not going far enough or going too far.
Zurich, Switzerland (GenevaLunch) – Former Zurich private banker Oskar Holenweger, investigated by Swiss police for seven years, has been indicted on money laundering charges linked to French engineering firm Alstom. The case spilled across borders in 2007 to Alstom’s French and UK offices, where police have investigated the company for using its Swiss subsidiary as a funnel for bribe money, reportedly some CHF70 million a year.
The Swiss Justice Department announced the charges Thursday 6 May, saying that it is dropping earlier investigations into money laundering linked to drug trafficking, which triggered suspicions about Holenweger at the start. It admitted that the case has taken far too long to reach the courts and that it was a stroke of luck, finding a document from KPMG that brought to the surface a possible link with a large French industrial company.
The accused will now go before the Federal Criminal Court in Bellinzona to face several charges:
©2010 Chappatte, distributed by Globe Cartoon. More cartoons on Chappatte’s web site. Geneva-based Patrick Chappatte works for the International Herald Tribune, for Geneva newspaper Le Temps, and for NZZ am Sonntag. All cartoons reproduced with permission.
Preventive measures but also intervention options part of new Swiss regulatory system
Bern, Switzerland (GenevaLunch) - Switzerland will not create a new tax on banks unless there is a coordinated international effort to do so. The announcement Wednesday 28 April was the latest following a series of decisions made by the Swiss government this week concerning banks and the financial sector as a whole. The accent will instead be put on bank regulatory measures to strengthen the industry’s ability to withstand financial crises. “Such measures are more effective and efficient than fiscal measures. A financial activities tax should thus be considered [only] when a coordinated international procedure is emerging.”
The government notes that “massive budgetary problems” in several countries have led to calls for more taxes on the financial sector, but in Switzerland the bailout of UBS, the country’s largest bank, resulted in a gain of CHF1.2 million for the government, not a loss. The federal government does not currently need to generate additional tax revenues, it notes, and it considers tax solutions to be an unsuitable way to manage systemic risks in the finance industry.
Brady Dougan, Credit Suisse, will face investors' questions on compensation at the AGM 30 April 2010 in Zurich
Update 15:45 Bern, Switzerland (GenevaLunch) – The Swiss federal government is taking three steps to curb what it calls “excessive salaries in banks and insurance companies.” It noted in a press release Wednesday afternoon 28 April that the measures were necessary because “inappropriate compensation systems with false incentives were jointly responsible for excessive risk taking, which led to the financial market crisis.” Swiss banks and insurance companies are key to the health of the Swiss economy, Bern noted, and excess pay packages are “objectionable particularly in the case of loss-making companies.”
The announcement comes just two days ahead of Credit Suisse’s annual meeting, where pay packages are on the agenda.
The three measures are:
- salary systems of financial institutions getting government assistance should be regulated for the duration of the support
- variable salary components above CHF2 million that depend on company profits should no longer be treated as personnel expenses for tax purposes, but as profit distribution (taxed as corporate profits)
- employee stock options should be taxed when they are exercised rather than when they are granted.
The last item will go directly to parliamentary committees for consideration in May 2010, but the other two require legislation to be drafted, which the Federal Department of Finance has been asked to do by autumn 2010.
Bern, Switzerland (GenevaLunch) - Swiss bank UBS will be billed an estimated CHF40 million by the Swiss government for the cost of providing help to US judicial authorities based on two requests, the Federal Council announced Wednesday afternoon 28 April. The government earlier this year said it would bill the bank CHF1 million but today it said that its expenses would amount to CHF40m and “the particular circumstances leading to both administrative assistance requests from the Internal Revenue Service (IRS) on account of the conduct of UBS in the United States justify billing the costs incurred to UBS.”
Swiss parliament in session Photo®Swiss parliament
The requests for help were made in July 2008 and August 2009 and are part of the search by US tax authorities for information on fraud-related bank accounts held at UBS. The August 2009 request led to the treaty signed between the two countries where Switzerland agrees to review 4,450 bank accounts by August 2010. The treaty will soon be debated by parliament, which must ratify it for it to be signed.
Swiss law does not have any provision for a bank or other financial institution to be billed for costs when requests for assistance are made, so the Federal Council has prepared a draft resolution for the parliament that covers only this case and only UBS.
Background, GenevaLunch
Swiss ministers head for Washington for joint IMF and World Bank meeting
Credit Suisse shares fall despite CHF2.05b profits
Bern / Zurich, Switzerland (GenevaLunch) – Credit Suisse and UBS, Switzerland’s two largest banks, will be subject to new liquidity rules starting 30 June 2010, part of efforts by the national bank and bank supervisory body to ensure that if the banks face a major crisis they will not pull the economy down with them. The news was announced Wednesday by the Swiss National Bank (SNB) and Finma, the supervisory body that was created in January 2009, who say the new liquidity rules are necessary to replace current ones, in place since 1988. These have not been revised significantly and “cannot ensure a level of resistance to crises for big, globally active Swiss banks, which is high enough.”
Finma and the SNB defined what they call “a stringent stress scenario” which “covers a general crisis on the financial markets coupled with a creditors’ loss of trust in the bank.
Basel, Switzerland (GenevaLunch) - UBS shareholders have sent a strong measure to the bank’s directors and executives: they approved a remuneration package in a non-binding vote, the first time the issue has been put to a vote. But 40 percent of shareholders present said “no” and 5 percent abstained, for an approval rating of only 55 percent. Shareholders traditionally vote far more heavily in favour of items placed on the agenda by the board.
A moment of black humour came when Kaspar Villiger, chairman of the board and former finance minister for Switzerland, was asked by a small shareholder how much time his predecessor, Peter Kurer, had spent teaching him the ropes of his new job, for which he was presumably emminently qualified. Kurer was paid an additional CHF1 million for the handover, according to figures in the annual report. There was laughter when Villiger replied that his wife had asked him the same thing when she read the annual report.
Record profits at UBS
Update 13:30 Zurich, Switzerland (GenevaLunch) – Swiss banking giant UBS has announced that pre-tax profits for the first quarter of 2010 will reach CHF2.5 billion. The statement was made ahead of its annual general meeting, which takes place takes place 14 April. Swiss media reports Monday indicate that the meeting Wednesday is likely to be a heated one.
This is its highest pre-tax profit since 2007.
Net client withdrawals from its wealth management units were down more than CHF15 billion from Q4 in 2009.
Institutional investors’ rep Ethos opposes remuneration and discharge agenda items
Two agenda items have prompted a group of investors led by Ethos to put up a fight at the annual general meeting Wednesday: the discharge of the board and executive committee members for 2007, 2008 and 2009 and the bank’s remuneration policy. Ethos is a UBS shareholder that represents a number of large Swiss institutional investors, notably several pension funds.
UBS announced its decision, in December, to clear the board and committee members from 2007-2009 of criminal wrongdoing, after internal and Finma (Swiss banking supervisory body) investigations into the bank’s losses and problems with the US tax office, the IRS.
More Swiss banking news:
- Swiss National Bank and Finma supervisory body will work more closely
- UBS says IRS has eyes on 20 Swiss banks
Zurich, Switzerland (GenevaLunch) - Swiss bank UBS has told Swiss German newspaper Tages-Anzeiger that it sent letters to several Swiss politicians early in the week to encourage them to approve an agreement between Bern and Washington, DC that now goes to parliament for a vote.
Bern / Zurich, Switzerland (GenevaLunch) – Marcel Ospel has told Swiss magazine Blick that he is ready to appear before a Swiss commission to answer questions about the debacle of the bank he headed two years ago, UBS. He has refused to comment or answer questions from political bodies since he left the bank in April 2008.
Political parties have begun wrangling, widely expected in Switzerland, over the US-Swiss agreement which covers UBS providing information to the US about 4,450 client accounts. Parties on the left are lining up to approve it only if pay caps are placed on bankers’ salaries, while the centre-right is arguing in favour of Parliament approving it, to secure the future of Switzerland as a financial centre.
Lausanne, Switzerland (GenevaLunch) – Regional and smaller customer banks continue to make inroads in Swiss banking, with cooperative bank Raiffeisen boosting its share of the Swiss mortgage market to 15 percent. Mortgages were up 9.1 percent, an increase of CHF9.2 billion.
The company’s 2009 financial results, announced Friday 5 March, show a strong inflow of new client money: CHF110.7b, an increase of 6.4 percent. The bank’s profit rose by 14.4 percent to CHF645.4 million.
Raiffeisen is the country’s third largest bank, after UBS and Credit Suisse, and it is steadily gained ground in recent years.
Geneva, Switzerland (GenevaLunch) – Gross profit in 2009 rose nearly 14 percent, to CHF115.2 million, the Banque Cantonale de Genève (BCGE) reported in its year-end financial report published Tuesday 2 March. Net profit increased 5.1 percent increase to CHF71.6m.
The bank’s results were boosted by a record rise in mortgages and good growth in total assets under management and administration, up 8.2 percent, an increase of CHF1.37m. It takes the bank past the CHF18 billion mark for these assets.
Brady Dougan, Credit Suisse CEO
Zurich, Switzerland (GenevaLunch) – Credit Suisse says it finished the difficult year of 2009 with “resilience”: CHF6.7 billion in income, net new assets of CHF44.2 billion and a tier 1 ratio of 16.3 percent. The bank also says, in reporting its financial results Thursday 11 February, that while the average variable compensation was CHF144,000, much of the bonus money is deferred: 40 percent throughout the bank and 60 percent for senior management. Deferred awards are “subject to performance criteria, which may result in future negative adjustments.”
The tier 1 ratio indicates the state of health of a bank’s reserves.
Geneva, Switzerland (GenevaLunch) – Swiss banks take four out of the 10 top slots in Euromoney‘s annual ranking of international private wealth managers, published 8 February. The number one place this year goes to Credit Suisse, which bumped UBS out of the place it has held since the rankings were created in 1994. UBS is now third, with HSBC remaining in second place. Zurich’s Bank Julius Baer is seventh and Geneva’s Pictet is tenth. The list is created by combining performance figures with nominations; more than 1,800 nominations were received this year.
Figures published in January 2009 by the Swiss Bankers Association show Switzerland as the global leader in offshore private banking money, with 27 percent of the world market. Other top players, such as the US and the UK, continue to lag well behind.
The news that Swiss banks are still pulling in large amounts of private wealth comes on the heels of several media reports in recent days that suggest Swiss banking has taken a severe battering. The Wall Street Journal (WSJ) 31 January wrote of a “renewed assault” on Swiss banks, once it became clear that Germany was likely to buy bank client data stolen from a Swiss bank.
But the US newspaper a week later wrote that the “gloom on Swiss banks looks overdone”, saying that Germany’s threats are legally dubious and most likely designed a “ruse” to frighten clients. This plus the US-bank UBS court case in 2009 “must be seen in perspective.
Hans-Rudolf Merz, Swiss finance minister, says the stolen bank data dispute must not be allowed to escalate
Bern, Switzerland (GenevaLunch) - The Swiss Federal Council says it will insist that any discussion about bank data stolen from Swiss banks and offered to Germany must take place during negotiations for a double taxation agreement. Switzerland has initialed 18 of these with other countries since March 2009 and it is in the process of negotiating one with Germany. Bern said in a statement Wednesday afternoon 3 February that it is cannot accept the argument that stolen data should be used to boost tax revenues.
“In its meeting today, the Federal Council expressed its astonishment at the German government’s indication of its readiness to take up the offer to obtain data on clients of a Swiss bank. Recently there has been an increase in the theft of Swiss bank client data which is subsequently sold abroad. This is a criminal offence in Switzerland.
All quiet on the Swiss front over Germany’s threat to buy stolen bank data
Update 10:40 Bern, Switzerland (GenevaLunch) – The Swiss government has issued a statement following a speech Monday by German Chancellor Angela Merkel where she said that Germany is ready to buy stolen Swiss bank data. Bern says in a brief note that Germany’s finance minister, Wolfgang Schaeuble, telephoned Swiss Federal Councilor and Finance Minister Hans-Rudolf Merz Monday. Merz told his German counterpart that Switzerland will not provide judicial assistance for requests which are based on stolen data. He added that Switzerland is, however, prepared to work more closely with Germany to unmask fiscal fraud, within the context of a revised double taxation treaty.
Switzerland has in recent months negotiated more than a dozen such treaties with other countries. It is currently in negotiations with Germany for a new treaty.
Merkel’s speech was made after Merz was contacted by Schaeuble by telephone to say that the German government has been approached with an offer to sell information on 1,500 bank clients for abut CHF3.5 million.
Taking a bite out of Swiss bankers' bonuses
Taking a bite out of Swiss bankers' bonuses
Credit Suisse cuts bonuses to pay UK tax, UBS told by Finma to reduce payout
Migros takes in former big bank clients
Zurich, Switzerland (GenevaLunch) – Switzerland’s two largest banks will be paying out bonuses, but the amounts are shrinking. Credit Suisse, has told several media 19 January that its overall bonus pool will shrink by 5 percent as it reduces payouts to senior managers to cover the new UK bank tax. The UK has announced it will levy a 50 percent tax on bonuses over £25,000, a one-time charge. Some 400 senior managers in the UK will have their bonuses cut up to 30 percent, Bloomberg reports.
Zurich, Switzerland (GenevaLunch) - Swiss banks are discussing the possibility of asking some foreign clients to sign forms saying they are in compliance with their countries’ tax laws, Patrick Odier told Swiss German newspaper NZZ. Odier is head of the Swiss Bankers Association. The interview appears in the Sunday edition of NZZ. Odier, a Geneva banker who has headed the bankers’ group since September, says Swiss banks are not interested in “black gold” but in line with Swiss law they are working to find solutions to work with other countries without having an automatic transfer of client information. He also told the newspaper that his association favours a tax on interest earned that would be paid to governments – but from anonymous sources.
Mixed signals from banks, for US citizens in Switzerland
Updated 01:00 Geneva, Switzerland (GenevaLunch) - Swiss banks have become more cautious in their relations with US citizens in the wake of problems the country’s largest bank, UBS, ran into in 2008 with the IRS over unreported income on the part of some of its clients. GenevaLunch, in a survey of several Lake Geneva area banks, found that without exception the banks say they do not discriminate against US citizens, and they continue to welcome new accounts. Stories nevertheless abound in Switzerland of US citizens who received letters in early 2009 from their banks saying their accounts were being closed – but few of of these people will speak openly about such letters, in part because the IRS tax authority encourages citizens to report on others who are not “compliant” in filing taxes as well as listing all worldwide assets.
US Ambassador Beyer suggests UBS could turn over fewer names
A GenevaLunch reporting team this week spoke with several people to determine the extent to which the personal banking problem is real or a recent urban myth. The team talked to seven of the eight banks which returned its calls and to a number of US citizens resident in Switzerland, as well as with members of American Citizens Abroad (ACA). Some of those interviewed participated in an informal meeting in Geneva 12 November with the new US ambassador to Switzerland, Donald Beyer, where the banking problem was raised.
Beyer later in the day told WRS public radio in Geneva that some 9,000 Americans took advantage of an IRS amnesty for citizens overseas that ended 15 October. He suggested in the radio interview that the number of names UBS will turn over to the IRS is likely to be lower than the numbers – up to 50,000 – tossed about earlier in 2009 by international media.
Zurch, Switzerland (GenevaLunch) - Bank Julius Baer joins the growing ranks of Swiss banks moving out of the US client managed wealth business. The bank announced that it has begun a gradual shift away from American customers, but the move is not hurting the bank’s overall wealth under management: the bank reports that in the first 10 months of 2009 total client assets increased to CHF234 billion and assets under management rose to some CHF 150 billion, up 17%, compared to a year earlier.
Spokesperson Martin Somogyi told GenevaLunch that details about the US client business are not available now, although the bank may provide them when it releases 2009 full year results in February 2010. He clarified that US citizens resident in Switzerland “who are tax compliant” are not part of this group and will remain bank clients.
Surprise at Italy's actions
Lugano, Switzerland (GenevaLunch) - Italian tax authorities raided 76 branches of Swiss banks in 22 cities around Italy, 27 October, ostensibly checking to see whether the institutions were in compliance with reporting requirements on bank operations. Federal Counsellor Pascal Couchepin said on national radio that they “were desperate measures” and suggested that the social contract between the Italian government and its citizens was in “bad shape”.
Italians who travel to Switzerland overland have been subjected to unprecedented border checks, with closed circuit cameras and police dogs at the border. The Italian finance and economy minister, Giulio Tremonti, has said that he wants to “dry up” the banks in Ticino, where it is estimated that most Italians have deposited their money.
Armed hedges, in France
Geneva, Switzerland (GenevaLunch) - Unigestion, a Geneva-based asset manager specializing in alternative investments like hedge funds, has opened an office in Paris, France in order to be able to offer its clients a fund that is not Swiss. Chief executive officer Patrick Fenal says in an interview with Bloomberg 21 October that Unigestion lost a mandate from a potential client because the company is Swiss. The new fund is managed by a French team in Paris and is registered in France.
Most Swiss private banks are already present in the major European Union financial centres, and can market their own funds to EU citizens directly. A source at Lombard Odier Darier Hentsch, a Geneva private bank, told GenevaLunch that he did not see how Unigestion’s move could improve its marketing success with clients, except for the one potential client, already lost.
Zurich, Switzerland (GenevaLunch) – Bank Julius Baer has acknowledged that is open to the possibility of buying the private client assets of large Dutch bank ING, reports Reuters, which spoke to the bank to clarify Italian newspaper reports that the bank is not interested. The news agency estimates ING’s private assets at $2 billion. The Dutch bank was hit hard by the global banking crisis: in January it wrote off $1.3 billion and laid off 7,000 employees.
Zurich, Switzerland (GenevaLunch) – Bank UBS is making headlines again but for two separate reasons: the bank told Dow-Jones it has hired Matthias Frisch as the new head of its Swiss Investment Banking arm. He replaces Andy Haeberli and comes from Horizon21 and previously spent 14 years with Goldman Sachs. And the Swiss Stock Exchange announced Friday morning that it is investigating the bank for “possible breaches of the Directive on Ad hoc Publicity and the Directive on Information relating to Corporate Governance by UBS AG.
Zurich, Switzerland (GenevaLunch) - Mortgage loans in Switzerland, 40 percent of which are new construction loans, rose by 4.6 percent in July. They had been falling but began to rise after Swiss interest rates moved lower starting in November 2008, says the Swiss National Bank (SNB). Mortgage loans constitute 80 percent of all loans.
Loans other than mortgage loans fell by 1.6 percent in July, however.
Zurich, Switzerland (GenevaLunch) – Cost-cutting is given as the reason for bank UBS’s decision to close the UBS Art Gallery it opened in New York City in 1986, Bloomberg reports. The bank has not issued a formal announcement. The decision does not affect the bank’s continuing sponsorship of the Basel Art fair, one of the contemporary art world’s major exhibitions, and its twin, Art Basel Miami Beach, bank spokesperson Kelly Smith told Bloomberg. UBS has been the major sponsor of the Basel show since 1994.
Zurich, Switzerland (GenevaLunch) – Bank Julius Baer, Switzerland’s largest wealth management bank, is putting Artio Global Investors, a New York-based fund management subsidiary that is heavily owned by local managers, on the New York Stock Exchange by the end of September, slightly ahead of schedule. The move is seen as “a fresh sign companies are starting to trust equities markets again after the subprime crisis,” reports Reuters.
Bern, Switzerland (GenevaLunch) – Contrary to what was widely reported in the international media Sunday France did not obtain 3,000 names of likely tax dodgers from Switzerland as the result of a new tax treaty signed 27 August, the Swiss federal finance department told news agency ATS Sunday. The treaty must be approved by the Swiss parliament before it enters into effect, a matter of several weeks.
Update 21 August Miami, Florida, USA (GenevaLunch) - A banker for NZB (Neue Zürcher Bank), Hansruedi Schumacher, and a Geneva and Zurich lawyer, Matthias Rickenbach, both Swiss, were indicted Thursday 20 August in Miami, Florida on charges of conspiring to defraud the US. The two are accused by the US of helping US residents to evade American taxes, including Jeffrey Chernick of New York and John McCarthy of Pasadena, California, two of four UBS clients who recently have been indicted for tax fraud after their names were given to the IRS in February 2009 by the bank, and who turned themselves in.
The two are accused, among other things, of telling “a New York businessman they paid an unnamed Swiss government official a $45,000 bribe for information on whether the businessman’s account would be revealed to US investigators,” Associated Press reports court documents as stating. AP also says the two are in Switzerland and it is not clear if they have US attorneys to represent them.
The New York Times says the new indictments indicate “that the American authorities are starting to pursue smaller players that may have helped Americans hide their money.”
